Pentagon spending is budget blind spot

Commentary: Imperial war staff is getting too expensive

Today the president will present his budget to Congress — kicking off what may be the biggest budget battle of our lifetimes.

For once, the heated rhetoric in Washington may be justified. According to the most recent forecasts from the Congressional Budget Office, the deficits over the next 10 years are heading for $7 trillion.

And even to keep the deficits down — yes, “down” — to that figure, the CBO is assuming the Bush tax cuts will all expire, and that by 2014 taxes will rise, as a share of the economy, by a third.

If we don’t raise tax rates, and instead continue with today’s levels, then the CBO says the deficits for the next 10 years will come to $12.5 trillion. That’s $125,000 for every household in the country.

That would double the national debt. And I’m not even counting the liabilities of Social Security and Medicare, which are trillions more.

Would you lend money to a company that operated like this? At less than 4% interest?

That’s what people are doing in the Treasury market. I appreciate that it’s a rigged market — many of the customers these days are political buyers, from China to the Federal Reserve. Nonetheless, many ordinary investors own Treasury bonds in their portfolios as well. And call them “safe.”

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Ten-year Treasurys pay just 3.6% interest — less than they did 50 years ago. Thirty-year bonds yield 4.7%.

I’ve heard of blind faith, but this is ridiculous. As the great poker guru Herbert Yardley once observed: I wouldn’t bet on that hand with counterfeit money.

Is anyone serious?

How serious is anyone about cutting the deficit?

If you want to find out this week, keep your eye on one item in the budget.

No, not Social Security. Not Medicare. Not even discretionary domestic spending.

The Pentagon. National “defense” — which could better be called the Imperial War Staff.

If we don’t tackle that, we won’t tackle anything else. And anyone who talks about cutting the deficit without addressing the gigantic white elephant on the Potomac simply isn’t serious. They should be ignored.

Fact: We spend more on national “defense” today, in real terms, than we did at the height of the Cold War. Yes, really.

We spend more than we did during Vietnam. We spend more than we did in the year after Pearl Harbor. No, I’m not kidding.

I’ve just gone through the budgets of the past 70 years with a copy of the consumer-price index and a calculator. I was so astounded I went back to double check.

The total military budget this year comes in at a thumping $750 billion — an annual tax of more than $7,000 on every household in the country. (Wouldn’t it be a lot cheaper to give each one an AK-47 and a box of ammo? I mean, isn’t that the point of the Second Amendment anyway?)

In 1960, when President Dwight Eisenhower was leaving office, military spending in today’s money totaled just $350 billion.

Half of what we spend today.

In 1970, when the Vietnam War was raging, we spent $450 billion. The most Ronald Reagan spent on defense was about $550 billion. Even in 1942, the year after Pearl Harbor, we only spent $350 billion.

Today, $750 billion. We have 750 military bases around the world. We have a battle fleet of 300 ships.

World War II was cheap, by comparison

Only in the years 1943, 1944 and 1945 did we spend more. And even there, the comparison isn’t as enormous as you’d think. Right now we’re spending about 75% as much as we did during those years, the peak of the biggest war in history.

Does it really cost three-quarters as much to fight Osama bin Laden as it did to fight Hitler and the Japanese (at the same time)? Seriously?

A few weeks ago Defense Secretary Bob Gates moved to pre-empt talk of “deep cuts” to defense by unveiling $100 billion in cuts of his own. The figures were faithfully reported by a tame media. Sounds impressive, right?

What a con.

As usual, hardly anybody bothered to read beyond the first line.

The “cuts” were spread over five years. So they’ll work out at an average of about $20 billion a year — chump change for the Pentagon. (Memo to my fellow journalists: Can we please stop quoting these bogus multiyear figures? They are pure spin. Budgets are annual. All budget figures should be annualized as well.)

And even that $20 billion figure is totally misleading. There won’t be any actual cuts. I spoke to the Pentagon press office. And not only did they confirm this, they were careful to emphasize the point. Bob Gates wasn’t planning to give one penny of this money back. He was merely proposing to shift money from some parts of his budget to others.

Why? Turns out, that spending — about $20 billion a year — wasn’t serving much purpose. So they’re going to axe those items, but keep the money to spend on other stuff.

You couldn’t make it up. Twenty billion of waste so bad even an internal probe found it unjustifiable. And yet no one cares. No one howls in outrage. The Tea Party couldn’t care less.

Blind spot about defense

The way so many people have a blind spot about the Pentagon never ceases to amaze me. Especially our growing legions of pseudo-conservatives. And I mean “pseudo” conservatives. These people are total phonies. They’re happy to see the federal government fixing bridges in Basra, so long as they don’t catch it fixing any in Bakersfield. Weird.

Or look at Rand Paul. He’s the freshman senator from Kentucky. He’s a Tea Party favorite, a radical, budget-cutting Republican. And he may be a real conservative. A few weeks back he outlined sweeping, draconian cuts to the entire federal budget. They were incredibly bold — eliminating the Department of Energy, cutting funding for the Food and Drug Administration by 60%, that sort of thing. Whether you agree with his ideas or not, he deserves real credit for political courage. He stuck out his neck and said what he’d cut, in black and white. He’s about the only one.

But then look at his “cuts” for defense: A mere 2.7% off the 2010 defense budget. And even here he’s counting many of Bob Gates’s “cuts” as well.

It simply defies belief. And yet when Paul talked about this at last week’s Conservative Political Action Committee conference, some members of the audience actually booed him for being so mean to the Pentagon.

What’s the matter with these people? President Barack Obama has increased defense spending by 13%. Yet I actually have a fund-raising letter somewhere sent to me by the Republican National Committee denouncing Obama’s “reckless defense cuts.” Bah.

If you work at the RNC, here’s an idea. Go to your bosses tomorrow, and volunteer to accept a percentage pay “cut” as big as Obama’s defense “cuts.” Let me know what they say.

It is always possible this week people will start to face up to the crippling cost of the Pentagon. But I’m not holding my breath. And I’m not just being cynical. I note that shares in the big defense contractors — like Lockheed Martin Corp.
LMT, +0.31%
and Raytheon Co.
RTN, -0.68%
— have been perking up recently. They were beaten down last year. But the market is starting to suspect that Pentagon spending may do okay after all.

And why not? Defense contractors spent $140 million last year on lobbyists in Washington. Those working on Capitol Hill know where the gravy train will be when they retire.

Campaign contributions ran to another $21 million — and three-quarters of that was by influential political-action committees, rather than individuals.

Empires always go bankrupt. And when they do, the last thing to go is always the empire itself.

So if you’re holding a lot of Treasurys, good luck. You’re going to need it.

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